Toxic Assets: How the Housing Market Responds to Environmental Information Shocks

Abstract

Employing national microdata from Zillow, we examine how United States housing markets respond to expanded information on local pollution stemming from a 1998 reporting change to the Toxics Release Inventory (TRI). Using both a difference-in-differences and a regression discontinuity in time design, we find news coverage of the new TRI data lowered sales prices of homes near the largest reporting polluters, but only within a tight geographic distance. Effects are isolated to homes within 0.5 miles of facilities reporting the largest amount of emissions (>100 tons). This price capitalization implies public information on local polluters shifted private market behavior, suggesting a role for government as provider of information.